Regular Disease Management Care Blog readers already know that the SGR is part of a 1997 law that was designed to battle rising health care costs. It relies on the blunt force of a "conversion factor" that unilaterally adjusts physicians' Medicare fee schedules to match the growth in the U.S. gross domestic product. Despite the good intentions, physicians costs have blown past the GDP faster than high income earners fleeing California. Not wanting to disappoint a grumpy constituency, Congress has repeatedly approved temporary patches to undo the conversion factor.

Unfortunately, the original 1997 law was never repealed and the Feds' bookkeepers have kept track of the growing gap between the GDP and the physician fees. Without another patch, Medicare will deploy the conversion factor and reduce payments by approximately 25% beginning in 2014.

"... holding payment rates through 2023 at the levels they are now would raise outlays for Medicare (net of premiums paid by beneficiaries) by $14 billion in 2014 and about $138 billion (or about 2 percent) between 2014 and 2023."

Whether you believe the projected slowdown in physician costs from $244 to $138 billion is the result of a moribund economy (the Republicans) or the enlightened interventions of Obamacare (the Democrats), the implications for the U.S. budget deficit are enormous. Knowing a fiscal opening when they see it, politicians have responded faster than the DMCB's misanthropy to a crowded Amtrak train.

1) Strangling the SGR by repealing the looming 25 percent across-the-board rate cut in 2014 along with any future rate cuts. Congress will establish a temporary five-year period of "predictable payment rates."

2) Finishing off fee-for-service (FFS) by soliciting organized medical society and "other relevant stakeholder" input to create multiple scientifically based payment models that use a variety of quality and efficiency metrics that will be periodically updated by Medicare.

These models will include registries, risk adjustment approaches, physician rankings, performance feedback, shared decision-making tools and pay-for-performance. Should a doc disagree that the registry-based risk adjusted ranking of how the shared decision making improved performance, he or she will be given opportunity to make an "appeal."

Ms. Schwartz's bill has more detail. She would lock-in the current payment rates until the end of 2014 and transition in the reforms described above over 5 years. During this time, she would also annually increase primary care physician payment rates by 2.5%. An interim report on the pace and success of the reforms would need to be submitted by the General Accounting Office to Congress in 2017. For docs that are struggling with the demise of fee-for-service, there'd be a payment track that retains FFS "for providers who are incapable of transitioning."

The DMCB's take:

1. Given the degree of Democratic and Republican agreement and the relatively low cost of "only" $138 billion, the likelihood of repeal of the SGR is better than it has been for years. Maybe it will really happen this year.

Maybe a 2019 target date is warranted. It'll take that long to not repeat history.

3. Also buried in the CBO report is this caveat:

.....spending per enrollee for Medicare and Medicaid—which generally has grown faster than GDP—is very difficult to predict. If per capita costs in those programs rose 1 percentage point faster or slower per year than CBO has projected for the next decade, total outlays for Medicare (net of receipts from premiums) and Medicaid would be about $650 billion higher or lower for that period."

While the DMCB understands the fiscal and political logic behind the timing of the SGR appeal, let's be honest: this is a budget decision built on assumptions based on guesses that are ultimately propped up by wishful political decision-making.

4. As a member of several professional medical organizations, the DMCB appreciates the proposed role of these entities in this next phase of health reform. If you are a doctor and you are not paying dues to one organization or not participating in meetings and emailing its leadership, you stand to lose.

Docs: Join. A. Professional. Society. Or. Association. Now.

That's especially true if, as an employed physician, you think your Health System CEO has your interests at heart. This might be a good start.

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About Jaan Sidorov MD, MHSA, FACP

While his web persona has been described as a "blogvocateur," Dr. Sidorov has wide range of knowledge about the medical home, condition management, population-based health care and managed care that is only exceeded by his modesty. He has been quoted by the Wall Street Journal, Consumer Reports and NPR’s All Things Considered.
He has over 20 years experience in primary care, disease management and population based care coordination. He is a primary care general internist and former Medical Director at Geisinger Health Plan.
He is primary care by training, managed care by experience and population-based care strategies by disposition.
The contents of this blog reflect only the opinions of Sidorov and should not be interpreted to have anything to do with any current or past employers, clients, customers, friends, acquaintances or enemies, personal, professional, foreign or domestic. This is also not intended to function as medical advice. If you really need that, work with a personal physician or call 911 for crying out loud.
Jaan can be reached at jaansATaolDOTcom.